After you have made the decision to sell your house, the next thing to decide is how to do it. There are a number of options available, most commonly private sale or auction.
There are several advantages to selling by auction, including: the fact that you have a predetermined period to advertise and market your home; that you have a set date for your property sale; and, that in a seller’s market, auctions can be particularly beneficial as they can generate a great deal of excitement and competition if there are numerous parties interested in your property. It’s important to remember when selling by auction there’s no guarantee that your home will sell for the amount you desire. The process of setting a reserve amount and seeing what type of bids come in can help you find out more about the current market and what buyers will be willing to pay. The following tips can help you increase your chances of success:
Auction Tip 1:
As you get started, you’ll want to find a real estate agency to work with that has a proven track record of auctioning homes in your neighbourhood. To compare options, be sure to ask for their results from recent auctions. Compare how many of these properties were sold successfully, rather than those which were passed in due to the reserve amount not being met. It might even be a good idea to attend one of the agent’s auctions before you commit to anything – to get a greater sense of how your own auction would be handled.
Auction Tip 2:
It’s important to choose a realistic reserve price, based on recent comparable property sales. You can work with your agent to set this minimum reserve. Naturally, you can choose any reserve that you wish, but you’ll also want to compare the asking price of similar homes to your own and the eventual price that they actually sold for. If the reserve price is then met at the auction, your property is considered to be on the market. As a result, you’ll want to ensure that you choose a reserve that you feel comfortable with, based on your home’s true worth. Bear in mind that your reserve price will be confidential, kept between you and the auctioneer. You won’t want to advertise this in advance.
Auction Tip 3:
As you prepare to sell your property, you will want to create and stick to a budget for your advertising costs. In many cases, homes sold by auction will be scheduled to sell after a relatively short time period, such as 30 days. To generate interest in your upcoming auction, effectively marketing and advertising your home is extremely important. The goal is to let buyers know that your home is on the market and to showcase its best features. Remember that you will need to pay the full cost of marketing and advertising whether or not your home ends up selling at the auction, so be sure that you understand how the budget will be utilised. A typical budget would be 0.5 to 1% of the estimated final sale price.
Auction Tip 4:
You will want to discuss, and come to an eventual agreement on, a commission or fee for your agent’s services. It’s important to determine what authority the agent will have to sell the house if the reserve price isn’t met during the auction. These terms will be written up into a contract, which must be signed by both you and the auctioneer. Be sure that you understand and are comfortable with all the details.
Auction Tip 5:
Take advantage of open-house inspections and remember that it’s crucial to present your property in the best possible light during these times. When selling by auction; you have a limited time to market your home so you must show off its best features. Take a look at our article, ‘How to get the best price for my home’ for staging tips. The aim is to attract as many qualified and interested buyers to your auction as possible. Because the auction is an unconditional type of sale, you must provide the buyers with as many open house opportunities as necessary to allow them to feel confident bidding.
Auction Tip 6:
After all of this effort, what if your house fails to sell on the big day? Don’t worry, all is not lost. Although you may have had your home passed in at the auction, this doesn’t mean that you have wasted your efforts. At this point, an experienced agent will follow up with any interested buyers and post the auction result. This will attract the attention of any additional parties who may have had an interest in your property but were unable to attend the auction.
Another course of action is to extend your advertising campaign to attract other potential buyers and continue exposing your property to a wider audience. This may involve additional costs, but it will keep attention on your property. This is important because the longer your property sits on the market, the less interest it will garner.
An auction can be a successful method of sale, but the decision will ultimately come down to how comfortable you are with this process and the particular market you are selling in. By keeping these auction tips in mind, you can help improve your chances of a successful auction.